For people who don't know what this is (like me), they have a good FAQ explaining "Proof of Stake" vs "Proof of Work":
> In proof of work (PoW) based public blockchains (e.g. Bitcoin and the current implementation of Ethereum), the algorithm rewards participants who solve cryptographic puzzles in order to validate transactions and create new blocks (i.e. mining). In PoS-based public blockchains (e.g. Ethereum's upcoming Casper implementation), a set of validators take turns proposing and voting on the next block, and the weight of each validator's vote depends on the size of its deposit (i.e. stake). Significant advantages of PoS include security, reduced risk of centralization, and energy efficiency.
I'm going to piggyback on your comment to present my unified theory of blockchain proof systems.
Start with proof of work. Now imagine that the vast majority of the cost is in the computers and the electricity is basically free. You've just derived proof of stake.
Start with proof of work. Now imagine that the vast majority of the cost is in the electricity and computers are basically free. You've just derived proof of burn.
Start with proof of burn. Now imagine that each burnt coin gets evenly redistributed to everyone as a dividend. You're back at proof of stake.
Start with proof of stake. Now imagine there's an amount of time that you must lock coins away to engage in stakeholding. Now set that time to infinity. You're back at proof of burn.
I've been trying to understand why PoS is an improvement over PoW. To me PoS seems like a weaker requirement on network control than PoW. Since PoW requires possession of actual physical hardware and electricity it should be more difficult to obtain than a virtual currency. To me moving from PoW to PoS is analogous to moving off of the gold standard and placing trust in the value of the currency with whomever possesses it.
It isn't a core tenant of PoW that the resources needed to participate are hard to get, it just so happens that if it is profitable to 'mine', the hardware needed will become scarce. That actually creates a problem, much like in the Bitcoin PoW algorithm, that its easy for the hardware production and ownership to become centralized.
PoW also requires large energy consumption as participants will inevitably enter a race to compute the fastest.
PoS has the benefit that you still lock away capital, much like in PoW, but rather than backing that capital by money put into hardware and electricity, you cut out the middle man and base the capital off of the value of the network token.
Pos also has added security benefits. Vitalik Buterin explains this very well: If someone attacks a PoW blockchain by getting 51+% of the hashing power, the network's only response to recover from the attack is to change the hashing algorithm. This will likely force the network to abandon ASICs since hardware wouldn't exist, and move (at least temporarily) to general-purpose CPUs/GPUs. As soon as the hashing can be done with general purpose computers, the game is over, and the attacker can attack forever without any extra loss of capital, other than electricity.
PoS has the benefit that the network can simply cause the attacker to lose their funds and no longer have a stake. If the attacker wants to continue the attack, they have to buy more of the network token to be equal to 51% of the staked value. This will cause a price increase. Each time the attacker attacks, the network will force them to lose their stake, and their money. The attacker won't be able to keep this going forever.
PoW comes with huge energy and computation requirements that can make scaling infeasibly difficult. It's possible, but challenging, to design a PoS system that is secure and does not consolidate power in the hands of those that own the most currency. This document[0] has a good description of the arguments for PoS and an overview of the theory behind it.
It does mitigate the risk of geographic centralization. It's not good for BTC security that a majority of the mining power is under the jurisdiction of a single nation state.
It is a much weaker requirement than PoW. Part of the reason PoS (a fitting acronym) is successful is because people are hysterical about Bitcoin's energy usage over time.
Rightly so. Bitcoin uses a lot of energy, and it's fair to worry.
But throughout history, people have always capitalized on fears to get something. Careful that you read these proposals with a skeptical eye.
There was an excellent comment on HN that unfortunately I can't dig up anymore, but it went into detail about why PoS has all kinds of subtle issues. Basic issues, like who gets what, can end up with weak guarantees.
It's important to remember that Bitcoin, for all its flaws, is almost unkillable. The sole way a government can kill it -- any government -- is to invest >$2B into getting >51% hash power, then launching coordinated malicious doublespends for the purpose of shattering faith in bitcoin.
That's it. There's no other way.
PoS weakens those guarantees, and before this gets pushed through, it's good to understand in detail what the tradeoffs are, and game out whether that could give centralization any advantages.
(And if they say there are no tradeoffs and PoS confers no advantage to centralization compared to PoW, maybe research it and decide for yourself.)
This whole auto-drop-my-comments-to-the-bottom censorship is really tiring and just a way to discourage certain people from contributing to HN. I've been a member here since day 2 of the launch of Startup News, and this feels quite unfair. My pleas for reversing this decision have gone unanswered, so I have no idea what to do about it other than rant periodically until I get banned. Nothing good will come of that, but it's just a completely bogus situation. (Yeah, moderation is hard, and I respect that, but jeez. My comments all start out at the bottom and stay there.) </rant>
The usual explanation for how proof-of-stake works — compared to proof-of-work — is that it uses the scarce resource that is the chain’s own token, as opposed to the scarce resource that is electricity. The fundamental problem with this approach is that, in the absence of consensus, a token is not scarce at all — but rather its supply is unlimited — since infinitely many tokens exist on an infinite number of valid chains.
So, in order for a token to be limited in supply, consensus on which chain is the canonical one must already exist. Thus, proof-of-stake reaching consensus depends on consensus existing beforehand.
Scarcity of a digital decentralized token requires consensus on which chain to view as the truth. Therefore scarcity cannot be used as a requirement for reaching consensus.
Besides the lack of transaction scaling, the other slightly tough thing for me about cryptocurrencies is downloading many GB of data. If my Casper node is not a validator, does it still have to download the whole blockchain? Or can it operate on a smaller dataset?
Also does anyone know what the timeframe is supposed to be for sharding to be implemented or end up in an Alpha release? It seems that will probably also reduce the minimum storage requirements for most nodes in addition to increasing network transaction rates. Thanks.
I'm reading the paper looking for an answer. (as I'm hopping to be able to run a PoS node in the future)
As I understand PoS, for security to be achieved, you need to be able to lose a non trivial amount of ether. I guess the 1K5 ETH is designed to stay roughly above 1 million USD of stake.
This is the question and is there a way to lease/pool your coins to a validator if you have less than that because if not that basically sets up supernode-like behavior like Dash where the rich get richer. 1500 coins is currently 1.1 million USD
If it's not good enough for that little bit of a stake, you must provide incentives for others* to run it, and this is going create imbalances somewhere.
* - in a real sense, this is users, not-using, and offloading the work to those who would probably not actually use without incentive; the only difference between a PoW and a "put your money" type of stake, is that now you've added an entry fee that is hardly different than licensing (as in professional licenses, for various trades).
Will there be a 'fork' when PoS is released such that there will be 2 types of Ethereum after the split (one PoW and the other PoS), much like Ethereum and Ethereeum Classic?
NEM chain has a modified POS algorithm that not only takes in account the stake, but also the network effect of a node.
For instance a node with a high stake would need to move a lot of its stake around to overtake the network. I believe it uses an algorithm called EigenTrust++ and it has been working great for the last 2-3 years, since it was first coded into the chain.
If you want to checkout a PoS system that's been around for longer, https://decred.org has a hybrid PoW / PoS system which seems to get around a bunch of the issues listed here.
A very interesting project that aims to get high value from proof of stake is Omise Go
"We're looking to build the thing that will finally change the way money is handled the whole world over for the better, and leave a legacy that can sustain itself through all kinds of social and cultural changes. We're looking at accomplishing the spirit of the original Nakamoto vision of Bitcoin, the original Ripple vision (pre-blockchain Ripplepay), the original Paypal vision."
Have they completed scientific and adversarial review of the proposed guarantees and their respective proofs already? If I'd knew a flaw in Casper, I'd wait until the final release and deployment.
They have a series of formal proofs written by a mathematician to verify the staking algorithm, though that is only a small part of what is needed to secure a modern consensus system.
This article is full of problems, but the biggest one is failing to look at the global perspective:
While it is true that an individual miner/validator will be indifferent to spending money on electricity and mining equipment vs. purchasing coin to stake with, the difference between the two is a meaningful to non-miners/non-validators.
In the mining case, the miner is purchasing equipment and electricity that divert real resources away from the production of other goods and services.
In the validating case, the validator purchases coin, which causes prices of that coin to adjust upward. The economy keeps producing the exact same goods and services as if the validation activity did not exist (after a short dislocation, which would be very short in this case because few contracts are denominated in cryptocurrency).
So "nothing is cheaper than proof of work" is a true statement if you are a miner/validator. However, it is a false statement if you are cryptocurrency designer.
Obviously, it is easy to design a coin which is MORE wasteful globally than BTC. Instead of running on electricity and hashing, make it run on proof of extinction (verified in major newspapers) of critically endangered animals. The miners will spend time and energy doing terrible things to the planet, but they will spend no more money time or energy on it than they would have spent on electricity and ASICs. Why should it be impossible to design a currency that is LESS wasteful than proof of work?
I recommend against reading the truthcoin.info blog in general. This kind of wooly headedness is widespread, and the writing style is obtuse enough to make it hard to figure out exactly why the author is correct or incorrect.
[+] [-] dmix|8 years ago|reply
> In proof of work (PoW) based public blockchains (e.g. Bitcoin and the current implementation of Ethereum), the algorithm rewards participants who solve cryptographic puzzles in order to validate transactions and create new blocks (i.e. mining). In PoS-based public blockchains (e.g. Ethereum's upcoming Casper implementation), a set of validators take turns proposing and voting on the next block, and the weight of each validator's vote depends on the size of its deposit (i.e. stake). Significant advantages of PoS include security, reduced risk of centralization, and energy efficiency.
https://github.com/ethereum/wiki/wiki/Proof-of-Stake-FAQ
[+] [-] ehsankia|8 years ago|reply
[+] [-] loginx|8 years ago|reply
[+] [-] aphextron|8 years ago|reply
[+] [-] raverbashing|8 years ago|reply
[+] [-] IIAOPSW|8 years ago|reply
Start with proof of work. Now imagine that the vast majority of the cost is in the computers and the electricity is basically free. You've just derived proof of stake.
Start with proof of work. Now imagine that the vast majority of the cost is in the electricity and computers are basically free. You've just derived proof of burn.
Start with proof of burn. Now imagine that each burnt coin gets evenly redistributed to everyone as a dividend. You're back at proof of stake.
Start with proof of stake. Now imagine there's an amount of time that you must lock coins away to engage in stakeholding. Now set that time to infinity. You're back at proof of burn.
[+] [-] castratikron|8 years ago|reply
[+] [-] PretzelPirate|8 years ago|reply
PoW also requires large energy consumption as participants will inevitably enter a race to compute the fastest.
PoS has the benefit that you still lock away capital, much like in PoW, but rather than backing that capital by money put into hardware and electricity, you cut out the middle man and base the capital off of the value of the network token.
Pos also has added security benefits. Vitalik Buterin explains this very well: If someone attacks a PoW blockchain by getting 51+% of the hashing power, the network's only response to recover from the attack is to change the hashing algorithm. This will likely force the network to abandon ASICs since hardware wouldn't exist, and move (at least temporarily) to general-purpose CPUs/GPUs. As soon as the hashing can be done with general purpose computers, the game is over, and the attacker can attack forever without any extra loss of capital, other than electricity.
PoS has the benefit that the network can simply cause the attacker to lose their funds and no longer have a stake. If the attacker wants to continue the attack, they have to buy more of the network token to be equal to 51% of the staked value. This will cause a price increase. Each time the attacker attacks, the network will force them to lose their stake, and their money. The attacker won't be able to keep this going forever.
[+] [-] techman9|8 years ago|reply
[0] https://github.com/ethereum/wiki/wiki/Proof-of-Stake-FAQ
[+] [-] konschubert|8 years ago|reply
If (!) Proof-Of-Stake is able to achieve the same thing without the costs associated with PoW, then it is simply more efficient.
This means that the same value (secured cryptocurrenty) can be obtained at a much lower cost.
From a macroeconomic perspective, it is clear that equal results at lower cost must benefit the participants of the economy.
[+] [-] Agebor|8 years ago|reply
Main reasons are deducing centralization and more control for protocol designers to fine-tune incentives and punishments, to increase security.
[+] [-] companyhen|8 years ago|reply
That's why I like NEM's PoI (proof of importance) and Nebulas PoD (proof of devotion) algorithms as a more fair staking method
[+] [-] AlexCoventry|8 years ago|reply
[+] [-] EGreg|8 years ago|reply
[+] [-] pwaai|8 years ago|reply
Please feel free to correct me in case I'm wrong.
[+] [-] sillysaurus3|8 years ago|reply
Rightly so. Bitcoin uses a lot of energy, and it's fair to worry.
But throughout history, people have always capitalized on fears to get something. Careful that you read these proposals with a skeptical eye.
There was an excellent comment on HN that unfortunately I can't dig up anymore, but it went into detail about why PoS has all kinds of subtle issues. Basic issues, like who gets what, can end up with weak guarantees.
It's important to remember that Bitcoin, for all its flaws, is almost unkillable. The sole way a government can kill it -- any government -- is to invest >$2B into getting >51% hash power, then launching coordinated malicious doublespends for the purpose of shattering faith in bitcoin.
That's it. There's no other way.
PoS weakens those guarantees, and before this gets pushed through, it's good to understand in detail what the tradeoffs are, and game out whether that could give centralization any advantages.
(And if they say there are no tradeoffs and PoS confers no advantage to centralization compared to PoW, maybe research it and decide for yourself.)
This whole auto-drop-my-comments-to-the-bottom censorship is really tiring and just a way to discourage certain people from contributing to HN. I've been a member here since day 2 of the launch of Startup News, and this feels quite unfair. My pleas for reversing this decision have gone unanswered, so I have no idea what to do about it other than rant periodically until I get banned. Nothing good will come of that, but it's just a completely bogus situation. (Yeah, moderation is hard, and I respect that, but jeez. My comments all start out at the bottom and stay there.) </rant>
[+] [-] runeks|8 years ago|reply
So, in order for a token to be limited in supply, consensus on which chain is the canonical one must already exist. Thus, proof-of-stake reaching consensus depends on consensus existing beforehand.
Scarcity of a digital decentralized token requires consensus on which chain to view as the truth. Therefore scarcity cannot be used as a requirement for reaching consensus.
[+] [-] aoeusnth1|8 years ago|reply
[+] [-] Agebor|8 years ago|reply
https://hackmd.io/s/Hk6UiFU7z
[+] [-] ilaksh|8 years ago|reply
Also does anyone know what the timeframe is supposed to be for sharding to be implemented or end up in an Alpha release? It seems that will probably also reduce the minimum storage requirements for most nodes in addition to increasing network transaction rates. Thanks.
[+] [-] stri8ed|8 years ago|reply
Instead of storing entire state, Validator just needs to the current state root, and transactions must prove the state that they access.
[+] [-] joeblau|8 years ago|reply
The site is having a hard time loading, but does anyone know where the official Casper solidity interface is hosted?
[+] [-] stri8ed|8 years ago|reply
[+] [-] anonfunction|8 years ago|reply
[+] [-] acoye|8 years ago|reply
As I understand PoS, for security to be achieved, you need to be able to lose a non trivial amount of ether. I guess the 1K5 ETH is designed to stay roughly above 1 million USD of stake.
[+] [-] dangero|8 years ago|reply
[+] [-] angel_j|8 years ago|reply
If it's not good enough for that little bit of a stake, you must provide incentives for others* to run it, and this is going create imbalances somewhere.
* - in a real sense, this is users, not-using, and offloading the work to those who would probably not actually use without incentive; the only difference between a PoW and a "put your money" type of stake, is that now you've added an entry fee that is hardly different than licensing (as in professional licenses, for various trades).
[+] [-] kruhft|8 years ago|reply
[+] [-] dausama|8 years ago|reply
[+] [-] ukd1|8 years ago|reply
[+] [-] jv22222|8 years ago|reply
"We're looking to build the thing that will finally change the way money is handled the whole world over for the better, and leave a legacy that can sustain itself through all kinds of social and cultural changes. We're looking at accomplishing the spirit of the original Nakamoto vision of Bitcoin, the original Ripple vision (pre-blockchain Ripplepay), the original Paypal vision."
https://medium.freecodecamp.org/the-definitive-omisego-begin...
[+] [-] itoenocha|8 years ago|reply
eth.services.accounts.accounts[0] <Account(address=55029b23a9b2ca77ac012e184452b682edc82a67, id=None)>
[+] [-] coolspot|8 years ago|reply
web3.eth.getBalance(web3.eth.accounts[0], console.log);
[+] [-] 1_over_n|8 years ago|reply
:)
[+] [-] karlmcguire|8 years ago|reply
[+] [-] snissn|8 years ago|reply
[+] [-] itoenocha|8 years ago|reply
Stuck at this step, since the host 52.87.179.32 appears to be off-line
[+] [-] lostmsu|8 years ago|reply
Without respective proofs, what is the point?
[+] [-] drcode|8 years ago|reply
[+] [-] unknown|8 years ago|reply
[deleted]
[+] [-] DINKDINK|8 years ago|reply
I'm glad they're finally launching there PoS fork so it can have its inevitable outcome.
[+] [-] 1053r|8 years ago|reply
While it is true that an individual miner/validator will be indifferent to spending money on electricity and mining equipment vs. purchasing coin to stake with, the difference between the two is a meaningful to non-miners/non-validators.
In the mining case, the miner is purchasing equipment and electricity that divert real resources away from the production of other goods and services.
In the validating case, the validator purchases coin, which causes prices of that coin to adjust upward. The economy keeps producing the exact same goods and services as if the validation activity did not exist (after a short dislocation, which would be very short in this case because few contracts are denominated in cryptocurrency).
So "nothing is cheaper than proof of work" is a true statement if you are a miner/validator. However, it is a false statement if you are cryptocurrency designer.
Obviously, it is easy to design a coin which is MORE wasteful globally than BTC. Instead of running on electricity and hashing, make it run on proof of extinction (verified in major newspapers) of critically endangered animals. The miners will spend time and energy doing terrible things to the planet, but they will spend no more money time or energy on it than they would have spent on electricity and ASICs. Why should it be impossible to design a currency that is LESS wasteful than proof of work?
I recommend against reading the truthcoin.info blog in general. This kind of wooly headedness is widespread, and the writing style is obtuse enough to make it hard to figure out exactly why the author is correct or incorrect.
Edited for grammar/clarity.
[+] [-] unknown|8 years ago|reply
[deleted]